A Crisis of Faith & the Scientific Future of Patent Theory

Liivak, Oskar, St. John's Law Review

introduction

Throughout history, utilitarian rationales have formed the core foundation on which the United States patent system is built. Yet, more than ever before, that foundation appears untenably shaky. In 1958, the Senate hoped to gauge the performance of the patent system. It tasked economist Fritz Machlup with providing a comprehensive cost-benefit analysis of it. Machlup undertook the project, filed the report, and concluded with his now-famous assessment:

If we did not have a patent system, it would be irresponsible, on the basis of our present knowledge of its economic consequences, to recommend instituting [it]. But since we have had [one] for a long time, it would be irresponsible, on the basis of our present knowledge, to recommend abolishing it.1

Such indeterminate support surely caused concern but then again, at least at that time, perhaps we just had not developed the sophistication to make a full assessment. Indeed, as late as 1986, George Priest lamented that "[t]he ratio of empirical demonstration to assumption in [patent] literature must be very close to zero."2 Maybe it was okay if the jury was out on the patent system because maybe the data was still out, too.

Today, thirty years after Priest made those comments, a lot has changed.3 Many researchers from law and from economics have made it their life's work to study and empirically measure the patent system.4 Yet, despite that outpouring of effort, the overall picture is, as put by Mark Lemley, "complicated."5 We still have no proof that definitively refutes or supports the system, and we are still just "muddl[ing] through."6 But now, with all that effort expended, the ambivalence cannot be ignored. What was once a nagging concern is now an inescapable alarm.

What to do and where to turn during a crisis is never easy. Assessing our options certainly seems prudent. In his book Justifying Intellectual Property, Robert Merges does just that. He opens the book explaining, "Every time I . . . go looking for the utilitarian footings of the field, I come up empty."7 Rather than drop support for intelletual property altogether, Merges leaves behind its traditional utilitarian roots and instead aims to understand and justify intellectual property as a "fundamental right" as understood by Rawls, Waldron, Locke, and Kant.8 In many ways, the book is his reaction to the current utilitarian impasse. As he had been a scholar who often employed law and economics rationales, that new, decidedly nonutilitarian focus was surprising, and apparently it was surprising even to Merges himself.9

In part in reaction to Merges's comments, Mark Lemley published a recent essay decrying any abandonment of utilitarian foundations for intellectual property.10 His essay has provoked something of a minor firestorm in the usually placid world of intellectual property scholars.11 Lemley's primary concern with the shift from utilitarian arguments to more fundamental rights is the lack of any limiting principles that will produce a balanced compromise between disparate competing interests.12 For him:

A utilitarian IP framework has a metric for deciding whether we should give control over those terms to the people who claim them. But if IP is a Right, granted to the first creator not for a purpose but simply because they are first, it is hard to find a similar limiting principle.13

Furthermore, Lemley supports utilitarian foundations over a rights-based system because a rights-based approach is "not a science[;] . . . it does not admit the prospect of being proven wrong."14 He added that he is trying to draw the line "between theories of IP that are responsive to evidence and those that are impervious to it."15

It is Lemley's call for a falsifiable, scientific utilitarian theory that is the focus of this Essay. I wholeheartedly agree that we should endeavor to provide such a utilitarian theory for the patent system. But this Essay argues that this call is more radical than it appears. …

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